Merrydown shares slump as takeover talks fail

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Shares in Merrydown crashed 7p to an all-time low of 47.5p after the troubled Sussex-based cider maker announced that potential takeover talks had come to nothing. Several rivals are understood to have run a slide rule over the group but decided against a bid, or were not willing to offer a high enough price for the group.

Merrydown is now looking to raise more money from financial backers or through an equity issue. However the group, which is struggling under a debts of pounds 7.5m, denied it needed extra cash urgently to ensure its survival.

Andy Nash, Merrydown's new chairman, said: "We are restricted in what we can do with our present finances to develop the business. We are in discussions with several parties about raising extra money."

The group plans to use the extra money to put behind its two main brands Merrydown cider and Schloer, the fruit favoured soft drink. "Not enough money has been put behind our brands in the past and we want to increase our marketing and sales effort," said Mr Nash.

The group is also likely to implement more cost cuts. It recently reduced its workforce by more than 10 per cent. However, analysts raised concerns about the group's future. "The fact that the group was unable to attract a bidder says it all," said one City observer.

Merrydown, which produces Two Dogs lemonade, has suffered from a slump in the alcopops market which forced it to give up the distribution of the drinks to Scottish & Newcastle.

Merrydown's shares have fallen from a high of 298p in 1993 and the group is now valued at just pounds 5m. Even accounting for bid speculation the shares have underperformed the market by almost 60 per cent over the past 12 months.

Merrydown's problems culminated in Richard Purdey stepping down as the group's chairman after three decades with the group. Merrydown's failure to find a bidder is the latest setback for the troubled cider sector. Profits have also plummeted at Matthew Clark, which makes Diamond White and Dry Blackthorn, as it continues to lose market share.